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WestJet had been kicking Air Canada's bottom in the lucrative short-haul market. So what was a full-service carrier to do? Hire Steve Smith, WestJet's former president, to head up one of the new Air Canada spinoffs. ZIP Air launched in September, with four routes covering Vancouver to Winnipeg.

Q How did you get into the airline industry?

A I graduated from McMaster with my MBA and

I had job offers from Bell, Xerox and Air Canada, and they were all essentially the same--financial analyst-type jobs. I said to myself, If they're all the same, I wonder what I could do in my spare time. I could make free phone calls, I could Xerox my hand or I could fly around for free.

Q Why start up ZIP?

A Every full-service carrier is losing money; every low-fare carrier is making money. You either adapt to this reality or you may not last.

Q What was your vision when you took

this job?

A I knew what the marketplace

was looking for. Three years ago, short-haul travel was dominated

by the business traveller. Now we're seeing a completely different scenario--the visiting-friends-and-relatives market, made up of baby boomers, empty nesters and senior citizens. They are all flying more than ever before. And they're looking for three things: safety, reasonable air fares

and friendliness.

Q WestJet has a lock on that very formula.

Does ZIP want to duplicate WestJet's culture?

A We want to come up with our own.

We have staff from Air Canada, Canadian, Canada 3000, Royal Airlines, Air BC, Air Ontario and WestJet.

What we're looking for is the best practices from all those airlines--plus our own ideas. You can expect friendly service, Aeroplan points and connections

to Air Canada's network. We also

have a seat pitch of 32 to 33 inches,

which gives a six-foot-tall person four inches [of legroom]

Q Other airlines like Continental and British Airways

have tried low-cost divisions and they've failed.

What's different about Air Canada trying ZIP?

A The biggest difference is that it's 2002. We

now book 75% to 80% of ZIP's local service

over the internet, which dramatically reduces

our cost of operation. Also, four or five years ago, the full-service carrier and the low-fare carrier

had the same frequency of routes [whereas ZIP

has replaced four routes previously flown by Air Canada] It was very confusing for people because there was no differentiation between the two airlines. In our situation, people know it's not

Air Canada so you should not expect a meal,

you should not expect movies.

Q How else will ZIP lower costs?

A We only operate 737-200s, which makes us efficient. One type of aircraft means less training required for pilots, less maintenance and the need for fewer pilot reserves. We also have deals with the Air Canada Pilots Association and CUPE to get people at slightly lower salaries--8% lower in the case of the pilots' union. You have to give credit to

the unions; they understand there

is this shift in the marketplace.

Q Why would a pilot work for ZIP and be paid less than at Air Canada?

A If you go back to the

reason why people work,

I don't think it's always for money. ZIP is smaller. You

feel like you're part of a team.

A pilot called me yesterday from the terminal and we talked over a number

of things, including his satisfaction with

the company. At Air Canada, that kind of thing can't happen because of the size of

the operation and the hierarchy. We have four layers at ZIP, including myself. We

have a very thin, flat organization.

Q WestJet's CEO Clive Beddoe said your management style was more top-down than flat.

A There isn't a person here who

believes I'm dictatorial. If you came and talked with anybody here at ZIP you'd

find that this company is very much

a bottom-up kind of company--run by

the people.

Report on Business Company Snapshot is available for:
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